CREDIT SUISSE: The headlines around the Amazon-Whole Foods deal have been focusing on the wrong thing (AMZN)

Kimberly Chin

Oct. 11, 2017, 01:21 PM

Price cuts are not the only thing that Amazon's Whole Foods deal can deliver.

According to Credit Suisse Analyst Stephen Ju, delivery and order fulfillment services is where the money is at.

"While most of the headlines around the Whole Foods acquisition have been about price cuts, we believe the real path for Amazon to create lasting shareholder value is through fulfillment and delivery via Prime Now," Ju wrote in a note sent out to clients on Tuesday.

As it currently stands, there is only a 50.4% overlap with Prime Now delivery service availability and Whole Foods brick-and-mortar stores. Ju predicts that the expansion of Prime Now to areas where it is currently unavailable will go from 50% to 70% of zip codes with Whole Foods stores by 2022. Should that number reach 100%, Amazon's value could increase by 22%, Ju says.